During the first enrollment period, some consumers learned that despite promises to the contrary, they were not able to keep their health care plans if they liked them. President Obama took immediate action to rectify the issue, letting people stay in their preferred plans even if those policies did not meet the Affordable Care Act’s minimum coverage requirements.
This year, consumers ran into a different, but related, problem: After selecting and enrolling in their preferred plans through the ACA’s exchanges, some people learned that they would not have access to the providers of their choice.
Yet, by the time consumers began encountering narrow provider networks in 2014, state legislatures were well into their sessions or had even adjourned for the year.
“[2014] was a tricky year for legislatures to respond,” Richard Cauchi, a state health program director at the National Council of State Legislatures, told Modern Healthcare. Legislatures are more likely to tackle issues with network adequacy and narrow networks in 2015, once there was “a full year of information about results,” he suggested.
So is 2015 the year to address narrow networks? If so, what exactly are policy makers and legislators doing about it, and how will this affect narrow networks going forward? This edition of “Road to Reform” takes a closer look.
What Does the Market Look Like Now?
Per predictions made last year, health insurers preparing for the second open enrollment period continued to embrace narrow networks.
Why are plans increasingly limiting provider networks? Gerald Kominski, director of UCLA’s Center for Health Policy Research, chalked it up to Affordable Care Act, which universalized certain benefits and capped out-of-pocket costs. He told Modern Healthcare, “If you’re competing on price and you can’t vary copayment structure or deductibles, the only thing you can do is try and keep your networks as affordable as possible,” which means eliminating providers unwilling or unable to meet insurers’ cost expectations.
While narrow networks were not “unimportant before,” they are “just infinitely more important now. … We’re limiting the things that health plans can do to design networks and benefits,” Micah Weinberg, president at the Bay Area Council Economic Institute, told Health Leaders Media.
What’s Being Done To Address the Issue?
States are primarily taking regulatory or legislative action to ensure consumers have adequate provider choice on plans purchased through the exchanges. Here’s a snapshot of what’s happening in two states.
California
California has addressed the issue on all fronts, from consumer groups launching suits against insurers over allegedly inadequate provider networks, lawmakers taking legislative action and state regulators implementing immediate policy changes.
In October 2014, Gov. Jerry Brown (D) signed a bill (SB 964) that increased oversight of insurers’ provider networks by authorizing the state Department of Managed Health Care to review insurers’ annual report on timeliness compliance. More recently, state Sen. Ed Hernandez (D-West Covina) has proposed a bill (SB 137) that would require insurers to update their provider directories on a weekly basis, among other requirements.
Meanwhile, Insurance Commissioner Dave Jones (D) released regulations on Jan. 5 that his office said were designed “to address the deficiencies in the market we have been seeing.”
Department of Insurance officials noted that they have received complaints from consumers about difficulty getting doctor appointments, traveling long distances to access in-network care and encountering erroneous provider directories. Relatedly, multiple suits have been launched against Anthem Blue Cross and Blue Shield of California over the issue.
Separately, DMHC launched an investigation into Blue Shield and confirmed certain network inadequacies. About 18% of physicians listed in the insurers’ directory were not at the locations listed in the directory, and nearly 9% did not accept Blue Shield coverage.
Janice Rocco, deputy commissioner for health policy and reform at DOI, said the proposed regulations will bolster consumer protections. Among other requirements, insurers must update in-network provider registries on a weekly basis, as well as provide the information online and in print at consumers’ request.
And perhaps most importantly, if insurers “don’t have a provider in-network who is accessible, the health plans have to arrange for a provider out-of-network,” Rocco said, adding that the “cost sharing has to be the same” to shield consumers from unexpected expenses.
With political pressure from DOI and watchdog oversight from DMCH, “insurance companies are changing their business model for the individual market overnight,” Weinberg said.
Similarly, Kominski noted, “If this is the direction at least a piece of the market is going, the bigger group market may follow suit.”
South Dakota
South Dakota took a slightly different route to address the issue. On Nov. 4, 2014, state residents voted 62% to 28% to implement an “any-willing-provider” law.
The ballot measure (IM 17) requires insurers to explicitly outline state evaluation criteria and ensure that providers have a due process to join the insurers’ networks if they are able and willing to meet those criteria.
Besides South Dakota, 27 states have adopted AWP laws, and 13 — including South Dakota — have implemented measures that apply to physicians.
Broadly speaking, South Dakota’s law and others like it aim to protect consumer choice by barring insurers from restricting networks based on certain characteristics, such as a provider’s geographic region. The laws vary in scope, ranging from broad measures that apply to all or most of providers in the state to more specific ones that might only apply to a certain type of provider, such as pharmacists.
“The Affordable Care Act has certainly revived concerns and thinking [about AWP laws], although so far it is not a policy that has swept the states or gotten everyone’s attention to enact new or broader-based state law requirements,” Cauchi recently told Managed Care.
Paul Ginsburg, senior fellow at the Schaeffer Center for Health Policy and Economics at the University of Southern California, told Managed Care that such laws “might be more disruptive going forward because some of these narrow-network plans are … looking at providers’ overall cost rather than just their unit prices.”
“So in a sense, whereas any-willing-provider does not come into play if the narrow networks are just built on low prices — because basically to get into a network you have to meet the insurer’s terms and conditions — it’s really about providers whose prices are low enough but the insurers don’t want them because of their overall practice records. It becomes a quality issue, a broader efficiency issue,” he explained.
Meanwhile, groups like the Federal Trade Commission and America’s Health Insurance Plans have voiced concern that such laws will increase costs. FTC in March 2014 wrote, “Although more limited networks may sometimes limit patient choice, [AWP] … laws can make it more difficult for health insurers, plans or [pharmacy benefit managers] to negotiate discounts from providers, resulting in higher costs.”
What’s Next?
In the end, it might matter less about what state and federal governments are doing, and more about “what kind of enforcement we will see,” Gary Cohen, former deputy administrator and director of CMS’ Center for Consumer Information and Insurance Oversight, told Kaiser Health News.
Specifically, he discussed network provider directory laws, such as the one proposed in California. “If insurers can’t provide up-to-date information [on their provider networks], that risks the whole concept of these narrow networks.”
Speaking more broadly, Cohen said “this whole question of narrow networks is critical” for evaluating the ACA in 2015.
“We need to look at what works and what doesn’t [and] encourage what works. … We need to see if we can make the case that smarter networks result in better outcomes, more efficient care, less over-treatment, and lower costs.”
Around the nation
Here’s a look at other stories making news on the road to reform.
Reality check on ‘universal health care.’ A CNN analysis explores where President Obama’s initiatives stand in comparison to the pledges he made during his first presidential campaign, including the gap between his promise to provide universal health care coverage and the ACA in practice.
Another kind of coverage gap. With Hispanic consumers accounting for just 10% of new enrollees in the second enrollment period, HHS is upping its outreach to Latino populations from 10% in 2014 to a full third of the ACA’s media budget this year.
Illinois’ rough transition. Illinois residents are reporting long wait times, incorrect insurance information and other care disruptions, are the state’s Department of Healthcare and Family Services works to shift 2.2 million Medicaid beneficiaries into managed care plans.